Unilever's Dutch headquarters in Rotterdam
Pioneer n. A person or group that originates a new line of thought or activity or a new method or technical development. (Merriam-Webster)
Pioneer n. An innovator. (American Heritage)
Becoming the first blue-chip company to give investors a say on its climate strategy, Unilever’s Board, in a truly pioneering act, announced in December that it will put the company’s plans to cut greenhouse gas emissions to a shareholder vote, a move consistent with their decades-long leadership by example in corporate social responsibility.
Shareholders will vote at the May 5 annual meeting on measures like cutting emissions in its operations and through its value chain to net zero by 2030, and cutting the environmental impact of its products by half. The $120 billion giant – makers of Ben & Jerry’s ice cream, Lipton tea, and Hellmann’s mayonnaise – also plans to cut emissions from product sourcing through point of sale to net zero by 2039, 11 years ahead of the Paris Accord deadline.
The genealogy of pioneering leadership
Unilever CEO Alan Jope said, “I intend to build further on Unilever’s century-old commitment to responsible business. It is not about putting purpose ahead of profits; it is purpose that drives profits.” Jope’s remarks shouldn’t come as a surprise to Unilever stakeholders or observers; Paul Polman, Unilever’s previous CEO (2009 to 2019), was and still is widely respected as a leading global corporate voice in calling for action on environmental and social causes. In a heralded speech in Washington, DC on May 19, 2015, Polman asserted his and his company’s commitment to “…what the business community can do to leverage the shared values of humanity and entrepreneurship.” They are not, he said, opposite sides.
Challenge #1: Man vs. Nature
“Two challenges are clear,” said Polman in that speech. “The first is man versus nature, a very simple one. We are using the earth’s resources at a faster pace than we can sustain, and the result is climate change,” the cost of which, said Polman is huge.
“We’re getting to the point,” said he, “that the cost of not acting is now greater than the cost of acting.” Aside from that ominous thought, though, Polman believes that decarbonizing the economy could be up to a $10 trillion opportunity.
A more inclusive capitalism
Further, those involved in the food business must lead in the battle against food insecurity. “Climate change and poverty are two sides of the same coin,” explained Polman, and that necessitates a “more inclusive capitalism” where we must move from “a license to operate to a license to lead.”
Challenge #2: Short-termism
The ultimate solution to problems such as climate change, poverty, food insecurity, and education require long-term thinking and action, said Polman. But, pointing to a survey from the World Economic Forum, he made it clear: “CEOs will tell you that a lot of pressure for short-termism is coming from their own Boards.” Countering that thinking, he reminded us that the fiduciary duties of Boards is not to have quarterly maximization of profits, but to ensure there is a future of the organization.
So what did Unilever do about that? Boldly, they abolished quarterly reporting – a very simple thing to say. But try getting that past your Board. And then, in a larger sense, it was merely a part of an imperative voiced by Polman: “You have to change your business model.”
Profit with purpose
Watching Polman’s 2015 speech, we understand that Unilever has radically elevated one if its priorities. While it is customary for most companies that profits come first and if any civic or humanitarian good comes of it, well then fine, Unilever attaches brands to meaningful purposes from
the start. The proof of concept, if any is needed, is that in their expansive portfolio, brands with a better developed brand purpose grew at twice the rate and have been more profitable.
How closely aligned this is with one part of a proclamation by Mahatma Gandhi. In “Seven Social Ills,” which he published in his newspaper “Young India” in 1925, Gandhi pointed to “commerce without morality,” precisely what “profit with purpose” refutes.
Unilever’s standing
At the time of Polman’s speech, Unilever had bragging rights to share prices being up, shareholders being happy, and business climbing. They also, said Polman proudly, were #1 on the United Nations Global Sustainability Index. Today, they have the same bragging rights. Business and share value are up and they still head the UN’s sustainability list.
It is no surprise that Unilever maintains these standings, especially when we see how deeply-rooted their leadership’s commitments are – and how far back they go.
It will be no surprise, either, when their shareholders approve the company’s climate strategy and plans this May.
